Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 14, 2023 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-39642 | |
Entity Registrant Name | CXApp Inc. | |
Entity Central Index Key | 0001820875 | |
Entity Tax Identification Number | 85-2104918 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | Four Palo Alto Square | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, Address Line Three | 3000 El Camino Real | |
Entity Address, City or Town | Palo Alto | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94306 | |
City Area Code | (650) | |
Local Phone Number | 575-4456 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Class A common stock, $0.0001 par value per share | ||
Title of 12(b) Security | Class A common stock, $0.0001 par value per share | |
Trading Symbol | CXAI | |
Security Exchange Name | NASDAQ | |
Warrants to purchase common stock | ||
Title of 12(b) Security | Warrants to purchase common stock | |
Trading Symbol | CXAIW | |
Security Exchange Name | NASDAQ | |
Common Class A [Member] | ||
Entity Common Stock, Shares Outstanding | 9,617,699 | |
Common Class C [Member] | ||
Entity Common Stock, Shares Outstanding | 5,487,300 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Successor [Member] | ||
Current Assets | ||
Cash and cash equivalents | $ 4,543 | |
Accounts receivable | 1,190 | |
Notes and other receivables | 292 | |
Prepaid expenses and other current assets | 1,115 | |
Total current assets | 7,140 | |
Property and equipment, net | 131 | |
Intangible assets, net | 20,056 | |
Operating lease right-of-use asset, net | 684 | |
Software development costs, net | ||
Goodwill | 44,200 | |
Other assets | 78 | |
Total Assets | 72,289 | |
Current Liabilities | ||
Accounts payable | 742 | |
Accrued liabilities | 2,945 | |
Deferred revenue | 2,200 | |
Acquisition liability | ||
Warrant liability | 13,003 | |
Operating lease obligation, current | 376 | |
Total current liabilities | 19,266 | |
Operating lease obligation, noncurrent | 330 | |
Other liabilities | ||
Deferred tax liability | 1,813 | |
Total Liabilities | 21,409 | |
Stockholders’ Equity | ||
Additional paid-in capital | 71,632 | |
Accumulated deficit | (20,715) | |
Accumulated other comprehensive income (loss) | (39) | |
Net parent investment | ||
Total Stockholders’ Equity | 50,880 | |
Total Liabilities and Stockholders’ Equity | 72,289 | |
Successor [Member] | Common Class A [Member] | ||
Stockholders’ Equity | ||
Common Stock value | 1 | |
Successor [Member] | Common Class C [Member] | ||
Stockholders’ Equity | ||
Common Stock value | $ 1 | |
Predecessor [Member] | ||
Current Assets | ||
Cash and cash equivalents | $ 6,308 | |
Accounts receivable | 1,338 | |
Notes and other receivables | 273 | |
Prepaid expenses and other current assets | 650 | |
Total current assets | 8,569 | |
Property and equipment, net | 202 | |
Intangible assets, net | 19,289 | |
Operating lease right-of-use asset, net | 681 | |
Software development costs, net | 487 | |
Goodwill | ||
Other assets | 52 | |
Total Assets | 29,280 | |
Current Liabilities | ||
Accounts payable | 1,054 | |
Accrued liabilities | 1,736 | |
Deferred revenue | 2,162 | |
Acquisition liability | 197 | |
Warrant liability | ||
Operating lease obligation, current | 266 | |
Total current liabilities | 5,415 | |
Operating lease obligation, noncurrent | 444 | |
Other liabilities | 30 | |
Deferred tax liability | ||
Total Liabilities | 5,889 | |
Stockholders’ Equity | ||
Additional paid-in capital | ||
Accumulated deficit | ||
Accumulated other comprehensive income (loss) | 1,155 | |
Net parent investment | 22,236 | |
Total Stockholders’ Equity | 23,391 | |
Total Liabilities and Stockholders’ Equity | 29,280 | |
Predecessor [Member] | Common Class A [Member] | ||
Stockholders’ Equity | ||
Common Stock value | ||
Predecessor [Member] | Common Class C [Member] | ||
Stockholders’ Equity | ||
Common Stock value |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Successor [Member] | Common Class A [Member] | ||
Common stock, par value | $ 0.0001 | |
Common stock, shares authorized | 200,000,000 | |
Common stock, shares issued | 8,582,699 | |
Common stock, shares outstanding | 8,582,699 | |
Successor [Member] | Common Class C [Member] | ||
Common stock, par value | $ 0.0001 | |
Common stock, shares authorized | 10,000,000 | |
Common stock, shares issued | 5,487,300 | |
Common stock, shares outstanding | 5,487,300 | |
Predecessor [Member] | Common Class A [Member] | ||
Common stock, par value | $ 0.0001 | |
Common stock, shares authorized | 200,000,000 | |
Common stock, shares issued | 8,582,699 | |
Common stock, shares outstanding | 8,582,699 | |
Predecessor [Member] | Common Class C [Member] | ||
Common stock, par value | $ 0.0001 | |
Common stock, shares authorized | 10,000,000 | |
Common stock, shares issued | 5,487,300 | |
Common stock, shares outstanding | 5,487,300 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | |
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Successor [Member] | |||||
Revenues | $ 1,915 | $ 2,257 | |||
Cost of Revenues | 480 | 567 | |||
Gross Profit | 1,435 | 1,690 | |||
Operating Expenses | |||||
Research and development | 1,668 | 1,879 | |||
Sales and marketing | 1,177 | 1,351 | |||
General and administrative | 1,412 | 1,653 | |||
Acquisition related costs | 164 | 164 | |||
Amortization of intangible assets | 697 | 813 | |||
Impairment of Goodwill | |||||
Change in fair value of earnout payable | |||||
Total Operating Expenses | 5,118 | 5,860 | |||
Loss from Operations | (3,683) | (4,170) | |||
Other Income (Expense) | |||||
Interest income, net | 5 | 4 | |||
Change in fair value of derivative liability | (12,040) | (10,354) | |||
Other income (expense), net | 7 | 7 | |||
Total Other Income (Expense) | (12,028) | (10,343) | |||
Net Loss, before tax | (15,711) | (14,513) | |||
Income tax benefit/(provision) | 981 | 2,541 | |||
Net Loss | (14,730) | (11,972) | |||
Unrealized foreign exchange gain/(loss) from cumulative translation adjustments | (39) | (39) | |||
Comprehensive Loss | $ (14,769) | $ (12,011) | |||
Successor [Member] | Common Class A [Member] | |||||
Other Income (Expense) | |||||
Basic weighted average shares outstanding | 8,582,699 | 8,582,699 | |||
Diluted weighted average shares outstanding | 8,582,699 | 8,582,699 | |||
Basic net loss per share | $ (1.05) | $ (0.85) | |||
Diluted net loss per share | $ (1.05) | $ (0.85) | |||
Successor [Member] | Common Class C [Member] | |||||
Other Income (Expense) | |||||
Basic weighted average shares outstanding | 5,487,300 | 5,487,300 | |||
Diluted weighted average shares outstanding | 5,487,300 | 5,487,300 | |||
Basic net loss per share | $ (1.05) | $ (0.85) | |||
Diluted net loss per share | $ (1.05) | $ (0.85) | |||
Predecessor [Member] | |||||
Revenues | $ 1,620 | $ 2,149 | $ 4,731 | ||
Cost of Revenues | 483 | 540 | 1,129 | ||
Gross Profit | 1,137 | 1,609 | 3,602 | ||
Operating Expenses | |||||
Research and development | 1,455 | 2,430 | 4,421 | ||
Sales and marketing | 964 | 1,604 | 2,726 | ||
General and administrative | 2,293 | 1,892 | 4,196 | ||
Acquisition related costs | 16 | 16 | |||
Amortization of intangible assets | 806 | 973 | 1,948 | ||
Impairment of Goodwill | 5,540 | 5,540 | |||
Change in fair value of earnout payable | (2,827) | ||||
Total Operating Expenses | 5,518 | 12,455 | 16,020 | ||
Loss from Operations | (4,381) | (10,846) | (12,418) | ||
Other Income (Expense) | |||||
Interest income, net | 1 | 8 | 9 | ||
Change in fair value of derivative liability | |||||
Other income (expense), net | (234) | (234) | |||
Total Other Income (Expense) | 1 | (226) | (225) | ||
Net Loss, before tax | (4,380) | (11,072) | (12,643) | ||
Income tax benefit/(provision) | 38 | (62) | |||
Net Loss | (4,380) | (11,034) | (12,705) | ||
Unrealized foreign exchange gain/(loss) from cumulative translation adjustments | (28) | 394 | 205 | ||
Comprehensive Loss | $ (4,408) | $ (10,640) | $ (12,500) |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Net Parent Investment [Member] Predecessor [Member] | AOCI Attributable to Parent [Member] Predecessor [Member] | AOCI Attributable to Parent [Member] Successor [Member] | Total [Member] Predecessor [Member] | Total [Member] Successor [Member] | Class A Common Stock [Member] Successor [Member] | Class C Common Stock [Member] Successor [Member] | Additional Paid-in Capital [Member] Successor [Member] | Retained Earnings [Member] Successor [Member] |
Beginning balance, value at Dec. 31, 2021 | $ 20,155 | $ 56 | $ 20,211 | ||||||
Net loss | (1,671) | (1,671) | |||||||
Stock-based compensation allocated from parent | 647 | 647 | |||||||
Parent’s common shares issued for CXApp earnout | 3,697 | 3,697 | |||||||
Taxes paid related to net share settlement of restricted stock units | (104) | (104) | |||||||
Net investments from parent | 6,444 | 6,444 | |||||||
Cumulative translation adjustment | (189) | (189) | |||||||
Ending balance, value at Mar. 31, 2022 | 29,168 | (133) | 29,035 | ||||||
Beginning balance, value at Dec. 31, 2021 | 20,155 | 56 | 20,211 | ||||||
Ending balance, value at Jun. 30, 2022 | 22,546 | 261 | 22,807 | ||||||
Beginning balance, value at Mar. 31, 2022 | 29,168 | (133) | 29,035 | ||||||
Net loss | (11,034) | (11,034) | |||||||
Stock-based compensation allocated from parent | 355 | 355 | |||||||
Net investments from parent | 4,057 | 4,057 | |||||||
Cumulative translation adjustment | 394 | 394 | |||||||
Ending balance, value at Jun. 30, 2022 | 22,546 | 261 | 22,807 | ||||||
Beginning balance, value at Dec. 31, 2022 | 22,236 | 1,155 | 23,391 | ||||||
Net loss | (4,380) | (4,380) | |||||||
Stock-based compensation allocated from parent | 158 | 158 | |||||||
Net investments from parent | 8,680 | 8,680 | |||||||
Cumulative translation adjustment | (28) | (28) | |||||||
Ending balance, value at Mar. 14, 2023 | 26,694 | 1,127 | 27,821 | $ (7,135) | $ 1 | $ 1,607 | $ (8,743) | ||
Ending balance, shares at Mar. 14, 2023 | 7,034,999 | ||||||||
Shares issued in connection with Business Combination | 69,928 | $ 1 | 69,927 | ||||||
Shares issued in connection with Business Combination, shares | 1,547,700 | 5,487,300 | |||||||
Net loss | 2,758 | 2,758 | |||||||
Stock-based compensation | 2 | 2 | |||||||
Cumulative translation adjustment | |||||||||
Ending balance, value at Mar. 31, 2023 | 65,553 | $ 1 | $ 1 | 71,536 | (5,985) | ||||
Ending balance, shares at Mar. 31, 2023 | 8,582,699 | 5,487,300 | |||||||
Beginning balance, value at Mar. 14, 2023 | $ 26,694 | $ 1,127 | $ 27,821 | (7,135) | $ 1 | 1,607 | (8,743) | ||
Beginning balance, shares at Mar. 14, 2023 | 7,034,999 | ||||||||
Ending balance, value at Jun. 30, 2023 | (39) | 50,880 | $ 1 | $ 1 | 71,632 | (20,715) | |||
Ending balance, shares at Jun. 30, 2023 | 8,582,699 | 5,487,300 | |||||||
Beginning balance, value at Mar. 31, 2023 | 65,553 | $ 1 | $ 1 | 71,536 | (5,985) | ||||
Beginning balance, shares at Mar. 31, 2023 | 8,582,699 | 5,487,300 | |||||||
Net loss | (14,730) | (14,730) | |||||||
Stock-based compensation | 96 | 96 | |||||||
Cumulative translation adjustment | (39) | (39) | |||||||
Ending balance, value at Jun. 30, 2023 | $ (39) | $ 50,880 | $ 1 | $ 1 | $ 71,632 | $ (20,715) | |||
Ending balance, shares at Jun. 30, 2023 | 8,582,699 | 5,487,300 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 2 Months Ended | 4 Months Ended | 6 Months Ended |
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Successor [Member] | |||
Operating activities | |||
Net loss | $ (11,972) | ||
Adjustments to reconcile consolidated net loss to net cash used in operating activities | |||
Depreciation and amortization | 28 | ||
Amortization of intangible assets | 813 | ||
Amortization of right of use asset | 102 | ||
Deferred income taxes | (2,541) | ||
Provision for bad debt expense | 1 | ||
Stock-based compensation expense | 98 | ||
Gain on change in fair value of earnout payable | |||
(Gain) loss on foreign currency transactions | (4) | ||
Loss on change in fair value of derivative liability | 10,354 | ||
Impairment of goodwill | |||
Other | |||
Change in operating assets and liabilities: | |||
Accounts receivable and other receivables | 962 | ||
Prepaid expenses and other current assets | 152 | ||
Other assets | (37) | ||
Accounts payable | 281 | ||
Accrued liabilities | (4,399) | ||
Income tax liabilities | |||
Operating lease liabilities | (102) | ||
Deferred revenue | (334) | ||
Net cash used in operating activities | (6,598) | ||
Investing activities | |||
Purchases of property and equipment | (26) | ||
Investment in capitalized software | |||
Cash acquired in connection with Business Combination | 10,003 | ||
Net cash provided by (used in) investing activities | 9,977 | ||
Financing activities | |||
Net equity investment from parent | |||
Taxes paid related to stock-based compensation | |||
Repayment of CXApp acquisition liability | |||
Repayment of related party promissory note | (328) | ||
Net cash (used in) provided by financing activities | (328) | ||
Effect of exchange rate changes on cash and cash equivalents | (11) | ||
Net increase in cash and cash equivalents | 3,040 | ||
Cash and cash equivalents, beginning of period | 1,503 | ||
Cash and cash equivalents, end of period | $ 1,503 | 4,543 | |
Supplemental disclosures of cash flow information | |||
Cash paid for taxes | |||
Cash paid for interest | 6 | ||
Supplemental schedule of noncash investing and financing activities | |||
Right of use asset obtained in exchange for lease liability | 230 | ||
Parent’s common shares issued for CXApp earnout | |||
Noncash investment from parent | |||
Class A Common Stock and Class C Common Stock issued in connection with Business Combination | 69,928 | ||
Financing of Director and Officer Insurance (see Note 9) | 671 | ||
Predecessor [Member] | |||
Operating activities | |||
Net loss | (4,380) | $ (12,705) | |
Adjustments to reconcile consolidated net loss to net cash used in operating activities | |||
Depreciation and amortization | 228 | 310 | |
Amortization of intangible assets | 806 | 1,948 | |
Amortization of right of use asset | 40 | 132 | |
Deferred income taxes | |||
Provision for bad debt expense | |||
Stock-based compensation expense | 158 | 1,002 | |
Gain on change in fair value of earnout payable | (2,827) | ||
(Gain) loss on foreign currency transactions | (32) | 172 | |
Loss on change in fair value of derivative liability | |||
Impairment of goodwill | 5,540 | ||
Other | (166) | ||
Change in operating assets and liabilities: | |||
Accounts receivable and other receivables | (857) | 599 | |
Prepaid expenses and other current assets | (20) | (618) | |
Other assets | 19 | ||
Accounts payable | (796) | (332) | |
Accrued liabilities | (787) | 874 | |
Income tax liabilities | (518) | ||
Operating lease liabilities | (38) | (131) | |
Deferred revenue | 534 | (685) | |
Net cash used in operating activities | (5,144) | (7,386) | |
Investing activities | |||
Purchases of property and equipment | (9) | (50) | |
Investment in capitalized software | (45) | (159) | |
Cash acquired in connection with Business Combination | |||
Net cash provided by (used in) investing activities | (54) | (209) | |
Financing activities | |||
Net equity investment from parent | 9,089 | 10,501 | |
Taxes paid related to stock-based compensation | (104) | ||
Repayment of CXApp acquisition liability | (197) | (1,846) | |
Repayment of related party promissory note | |||
Net cash (used in) provided by financing activities | 8,892 | 8,551 | |
Effect of exchange rate changes on cash and cash equivalents | 1 | 166 | |
Net increase in cash and cash equivalents | 3,695 | 1,122 | |
Cash and cash equivalents, beginning of period | 6,308 | $ 10,003 | 5,028 |
Cash and cash equivalents, end of period | 10,003 | 6,150 | |
Supplemental disclosures of cash flow information | |||
Cash paid for taxes | 100 | ||
Cash paid for interest | 1 | ||
Supplemental schedule of noncash investing and financing activities | |||
Right of use asset obtained in exchange for lease liability | 284 | ||
Parent’s common shares issued for CXApp earnout | 3,697 | ||
Noncash investment from parent | 409 | ||
Class A Common Stock and Class C Common Stock issued in connection with Business Combination | |||
Financing of Director and Officer Insurance (see Note 9) |
Organization, Nature of Busines
Organization, Nature of Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Organization, Nature of Business and Basis of Presentation | NOTE 1 – Organization, Nature of Business and Basis of Presentation CXApp Inc. and its subsidiaries (“CXApp” or the “Company”) is in the business of delivering intelligent enterprise workplace experiences. The CXApp SaaS platform is anchored on the intersection of customer experience (CX) and artificial intelligence (AI) providing digital transformation for the physical workplace for enhanced experiences across people, places and things. The CXApp SaaS platform offers a suite of leading-edge technology workplace experience solutions including an enterprise employee application, indoor mapping, on-device positioning, augmented reality technologies, generative AI applications and an AI-based analytics platform, targeting the emerging hybrid workplace market. CXApp creates a connected workplace by reducing app overload, data fragmentation, and complex workflows and streamlines all capabilities through The Workplace SuperApp. All features, services and integrations are housed in one easy-to-access platform allowing businesses to deliver a more holistic employee experience in a hybrid workplace. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, CXApp does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of CXApp, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results for the periods presented are not necessarily indicative of the results for the full year ending December 31, 2023. These interim unaudited condensed consolidated financial statement should be read in conjunction with KINS Technology Group Inc.’s (“KINS”) audited consolidated financial statements and notes for the year ended December 31, 2022 and 2021 included in the annual report on Form 10-K/A for the year ended December 31, 2022, filed with the SEC on April 19, 2023, and the annual report of Legacy CXApp (as defined below) for the year ended December 31, 2022 and 2021 included as an exhibit to Form 8-K filed with the SEC on March 20, 2023. All material inter-company balances and transactions have been eliminated. On September 25, 2022, an Agreement and Plan of Merger (the “Merger Agreement”), was entered into by and among Inpixon, KINS, CXApp, and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS (“Merger Sub”), pursuant to which KINS acquired Inpixon’s enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (“Legacy CXApp”) in exchange for the issuance of shares of KINS capital stock (the “Business Combination”). As a result of the Business Combination, KINS changed their name to CXApp Inc. (“CXApp”). The shares are now trading on the Nasdaq using the ticker CXAI. The transaction closed on March 14, 2023. See Note 3 for more details. Unless the context otherwise requires, “we,” “us,” “our,” “CXApp” and the “Company” refer to CXApp Inc., a Delaware corporation, and its consolidated subsidiaries following the Business Combination (as defined below). Unless the context otherwise requires, references to “KINS” refer to KINS Technology Group Inc., a Delaware corporation (“KINS”), prior to the Business Combination. All references herein to the “Board” refer to the board of directors of the Company. “Legacy CXApp” refers to CXApp Holding Corp., a Delaware corporation and a wholly owned subsidiary of the Company, which the Company acquired through the Business Combination. Prior to the Separation (as defined below), Legacy CXApp was a wholly owned subsidiary of Inpixon, a Nevada corporation (“Inpixon”). The Business Combination was accounted for using the acquisition method (as a forward merger), with goodwill and other identifiable intangible assets recorded in accordance with GAAP, as applicable. Under this method of accounting, the “Enterprise Apps Business” (formerly known as CXApp) is treated as the “acquired” company for financial reporting purposes. KINS (now known as CXApp Inc.) has been determined to be the accounting acquirer because KINS maintains control of the Board of Directors and management of the combined company. The unaudited condensed consolidated financial statements of Successor and Predecessor are not comparable due to a new basis of accounting that was created from the business combination that occurred on the Closing Date (see Note 3). Therefore, the reporting period has been separated by a black line in the condensed consolidated financial statements with the Predecessor representing the pre-Closing Date period (January 1, 2023 through March 14, 2023) and the Successor representing the post-Closing Date period (March 15, 2023 through June 30, 2023). The Company noted that the “Predecessor” includes financial information related to the Enterprise Apps Business (as defined in Note 3), while the “Successor” includes financial information related to the newly formed company after the business combination. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – Summary of Significant Accounting Policies Liquidity As of June 30, 2023 (Successor) the Company had a working capital deficit of approximately $ 12,126 4,543 14,730 11,972 6,598 4,399 435 11.50 5,003 The Company cannot assure that it will ever earn revenues sufficient to support their operations, or that it will ever achieve profitable operations. The Company’s recurring losses and utilization of cash in its operations are indicators of substantial doubt that the entity can continue as a going concern however with the Company’s current liquidity position the Company has taken steps to reduce operating expenses resulting in a more efficient cost structure. The Company intends to finance its future working capital requirements and capital expenditures from cash generated from operating activities and may consider raising funds from equity financings. Management believes that the actions presently being taken to further implement its business plan and generate its revenues provide the opportunity for the Company to continue as a going concern for at least 12 months from the issuance of these condensed consolidated financial statements. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect for the twelve months from the issuance of these condensed consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of: ● the valuation of stock-based compensation; ● the valuation of warrant liabilities; ● the allowance for credit losses; ● the valuation allowance for deferred tax assets; and ● impairment of long-lived assets and goodwill. Cash and Cash Equivalents Cash and cash equivalents consist of cash, checking accounts, money market accounts, temporary investments and certificates of deposit with maturities of three months or less when purchased. As of June 30, 2023 (Successor), the Company had cash equivalents of approximately $3,863 thousand of certificates of deposit held by a number of banks limited to $250 thousand per bank with a duration of 90 days or less. As of December 31, 2022 (Predecessor), the Company had no cash equivalents. Accounts Receivable, net and Allowance for Credit Losses Accounts receivables are stated at the amount the Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated due to un-collectability. Bad debt reserves are maintained for various customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings, or deterioration in such customer’s operating results or financial position. If circumstances related to a customer change, estimates of the recoverability of receivables would be further adjusted. The Company’s allowance for credit losses is not significant as of June 30, 2023 (Successor) and December 31, 2022 (Predecessor). Property and Equipment, net Property and equipment are recorded at cost, less accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting purposes using the straight-line method over the estimated useful lives of the assets, which range from 5 10 Intangible Assets Intangible assets primarily consist of developed technology, customer lists/relationships, non-compete agreements, intellectual property agreements, export licenses and trade names/trademarks. They are amortized ratably over a range of 5 10 Goodwill The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit is the entire company, due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company calculates the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations. Based on its assessments, the Company did not incur any impairment charges for the three months ended June 30, 2023 (Successor), for the period from March 15, 2023 to June 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor). The Company incurred an impairment charge of approximately $ 5,540 Leases and Right-of-Use Assets The Company determines if an arrangement is a lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company generally uses their incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known. Right-of-use assets related to the Company’s operating lease liabilities are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives. The Company’s lease terms that are used in determining their operating lease liabilities at lease inception may include options to extend or terminate the leases when it is reasonably certain that the Company will exercise such options. The Company amortizes their right-of-use assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses. The Company does not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year. Income Taxes The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Income tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. Comprehensive Income (Loss) and Foreign Currency Translation The Company reports comprehensive income (loss) and its components in its unaudited condensed consolidated financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments, affecting stockholders’ equity that, under GAAP, are excluded from net loss. Assets and liabilities related to the Company’s foreign operations are calculated using the Philippine Peso and Canadian Dollar, and are translated at end-of-period exchange rates, while the related revenues and expenses are translated at average exchange rates prevailing during the period. Gains or losses resulting from transactions denominated in foreign currencies are included in general and administrative expenses in the unaudited condensed consolidated statements of operations. The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S. dollar. Aggregate foreign currency net transaction losses were not material for the three months ended June 30, 2023 (Successor), for the period from March 15, 2023 to June 30, 2023 (Successor), for the period from January 1, 2023 to March 14, 2023 (Predecessor), for the three months ended June 30, 2022 (Predecessor), and for the six months ended June 30, 2022 (Predecessor). Revenue Recognition The Company recognizes revenue when control is transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company derives revenue from its software as a service for cloud based software, as well as design, implementation and other professional services for work performed in conjunction with its cloud based software. The Company enters into contracts with its customers whereby it grants a non-exclusive cloud-based license for the use of its proprietary software and for professional services. The contracts may also provide for on-going services for a specified price, which may include maintenance services, designated support, and enhancements, upgrades and improvements to the software, depending on the contract. Licenses for cloud software provide the customer with a right to use the software as it exists when made available to the customer. All software provides customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. License Subscription Revenue Recognition (Software As A Service) With respect to sales of the Company’s license agreements, customers generally pay fixed annual fees in advance in exchange for the Company’s software service provided via electronic means, which are generally recognized ratably over the license term. Some agreements allow the customer to terminate their subscription contracts before the end of the applicable term, and in such cases the customer is generally entitled to a refund pro-rata but only for the elapsed time remaining at the point of termination, which would approximate the deferred revenue at such time. The Company’s performance obligation is satisfied over time as the electronic services are provided continuously throughout the service period. The Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous access to its service. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer approved invoice. The timing of the Company’s revenue recognition related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a service. Software that relies on an entity’s IP and is delivered only through a hosting arrangement, where the customer cannot take possession of the software, is a service. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Renewals or extensions of licenses are evaluated as distinct licenses and revenue attributed to the distinct service is not recognized until (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right is evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. The Company recognizes revenue resulting from renewal of licensed software over time. Professional Services Revenue Recognition The Company’s professional services include milestone, fixed fee and time and materials contracts. Professional services under milestone contracts are accounted for using the percentage of completion method. As soon as the outcome of a contract can be estimated reliably, contract revenue is recognized in the statement of operations in proportion to the stage of completion of the contract. Contract costs are expensed as incurred. Contract costs include all amounts that relate directly to the specific contract, are attributable to contract activity, and are specifically chargeable to the customer under the terms of the contract. Professional services are also contracted on the fixed fee and in some cases on a time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company’s time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date. For fixed fee contracts provided by in house personnel, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Because the Company’s contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Anticipated losses are recognized as soon as they become known. For the three months ended June 30, 2023 (Successor), for the period from March 15, 2023 to June 30, 2023 (Successor), for the period from January 1, 2023 to March 14, 2023 (Predecessor), three months ended June 30, 2022 (Predecessor), and six months ended June 30, 2022 (Predecessor), the Company did not incur any such losses. These amounts are based on known and estimated factors. Contract Balances The timing of the Company’s revenue recognition may differ from the timing of invoicing to and payment by its customers. The Company records an unbilled receivable when revenue is recognized prior to invoicing and the Company has an unconditional right to payment. Alternatively, when invoicing a customer precedes the Company providing of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $ 2,200 2,162 729 865 2,198 Costs to Obtain a Contract The Company recognizes eligible sales commissions as an asset within prepaid expenses and other current assets as the commissions are an incremental cost of obtaining a contract with the customer and the Company expects to recover these costs. The capitalized costs are amortized over the expected contract term. Cost to Fulfill a Contract The Company incurs costs to fulfill their obligations under a contract once it has obtained the contract. These costs are generally not significant and are recorded to expense as incurred. Multiple Performance Obligations The Company enters into contracts with customers for its technology that include multiple performance obligations. Each distinct performance obligation was determined by whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company’s process for determining standalone selling price considers multiple factors including the Company’s internal pricing model and market trends that may vary depending upon the facts and circumstances related to each performance obligation. Sales and Use Taxes The Company presents transactional taxes such as sales and use tax collected from customers and remitted to government authorities on a net basis. Shipping and Handling Costs Shipping and handling costs are expensed as incurred as part of cost of revenues. These costs were deemed to be de minimus during each of the reporting periods. Business Combinations The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the accounts and results of operations are included as of and subsequent to the acquisition date. Segments The Company and its Chief Executive Officer (“CEO”), acting as the Chief Operating Decision Maker (“CODM”) determines its reporting units in accordance with FASB ASC 280, “Segment Reporting” (“ASC 280”). The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated. The Company has one operating segment and reporting unit. The Company is organized and operated as one business. Management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate. Stock-Based Compensation The Company measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The Company has issued stock-based compensation awards in the form of options and restricted stock units. Fair value for options and restricted stock units are valued using the closing price of the Company’s common stock on the date of grant. The grant date fair value is recognized over the requisite service period during which an employee and non-employee is required to provide service in exchange for the award. The grant date fair value of options is estimated using the Black-Scholes option pricing model based on the average of the high and low stock prices at the grant date for awards under the CXApp Inc. 2023 Equity Incentive Plan (the “Incentive Plan”). The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield is assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The Company uses the simplified method to estimate the expected term. The Company estimates forfeitures at the time of grant and revises these estimates in subsequent periods if actual forfeitures differ from those estimates. Derivative Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. The Company currently has two sets of warrants outstanding, known as the Private Placement Warrants and the Public Warrants, which are both classified as a liability. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance or modification. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance as a warrant liability, and adjusted to the then fair value in each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations and amounted to approximately $ 12,040 10,354 Earnings Per Share The Company computes basic and diluted earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. For the three months ended June 30, 2023 (Successor) and for the period from March 15, 2023 to June 30, 2023 (Successor) basic and dilutive net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options, warrants, and vesting of restricted units in the calculation of diluted net loss per common shares would have been anti-dilutive. The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the three months ended June 30, 2023 (Successor) and for the period from March 15, 2023 to June 30, 2023 (Successor). Schedule of antidilutive shares Successor (in thousands) Three Months Ended Period from Stock options 985 985 Restricted stock units 160 160 Warrants 24,080 24,080 Total 25,225 25,225 Fair Value Measurements FASB ASC 820, “Fair Value Measurements” (“ASC 820”), provides guidance on the development and disclosure of fair value measurements. The Company follows this authoritative guidance for fair value measurements, which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and expands disclosures about fair value measurements. The guidance requires fair value measurements be classified and disclosed in one of the following three categories: ● Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. ● Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. ● Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management. Fair value measurements are applied, when applicable, to determine the fair value of the Company’s warrant liability at each reporting period. See Note 10. Fair Value of Financial Instruments Financial instruments consist of cash and cash equivalents, accounts receivable, notes and other receivables and accounts payable. The Company determines the estimated fair value of such financial instruments presented in these financial statements using available market information and appropriate methodologies. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature. Carrying Value, Recoverability and Impairment of Long-Lived Assets The Company follows FASB ASC 360 “Property, Plant, and Equipment” (“ASC 360”) for its long-lived assets. Pursuant to ASC 360-10-35-17, an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited. Pursuant to ASC 360-10-35-21, the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Based on its assessments, the Company recorded no Recently Issued Accounting Standards Not Yet Adopted In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)”, which updates codification on how an entity would apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards should be accounted for in accordance with Topic 718, Compensation—Stock Compensation. The effective date of this update is for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently assessing potential impacts of ASU 2023-03 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements and disclosures. |
Business Combination
Business Combination | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | NOTE 3 – Business Combination On March 14, 2023, the Company completed the Agreement and Plan of Merger (the “Merger Agreement”), by and among KINS, Inpixon, CXApp, and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS (“Merger Sub”), pursuant to which KINS combined with Legacy CXApp, Inpixon’s enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (the “Enterprise Apps Business”). In exchange for the aggregate purchase price of approximately $ 69,928 1,547,700 5,487,300 9.94 44,200 The Company has authorized Class A and Class C common stock. Class A common stock and New CXApp Class C common stock are identical in all respects, except that New CXApp Class C common stock is not listed and will automatically convert into New CXApp Class A common stock on the earlier to occur of (i) the 180th day following the closing of the Merger and (ii) the day that the last reported sale price of New CXApp Class A common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-trading day period following the closing of the Merger. The Business Combination is being accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Business Combination. These values are subject to change as we perform additional reviews of our assumptions utilized. The Company has made a provisional allocation of the purchase price of the Business Combination to the assets acquired and the liabilities assumed as of the closing date. The following table summarizes the preliminary purchase price allocations relating to the Business Combination (in thousands): Schedule of assets acquired Description Fair Value Weighted Average Purchase Price $ 69,928 Assets acquired: Cash and cash equivalents $ 10,003 Accounts receivable 2,226 Notes and other receivables 209 Prepaid assets and other current assets 588 Operating lease right of use asset 557 Property and equipment, net 133 Other assets 42 Developed technology 9,268 10 Patents 2,703 10 Customer relationships 5,604 5 Tradenames and trademarks 3,294 7 Total assets acquired $ 34,627 Liabilities assumed: Accounts payable $ 461 Accrued liabilities 972 Deferred revenues 2,534 Operating lease obligation, current 194 Operating lease obligation, noncurrent 384 Deferred tax liability 4,354 Total liabilities assumed 8,899 Goodwill $ 44,200 The value of the intangible assets were calculated by a third party valuation firm based on projections and financial data provided by management of the Company. Goodwill represents the excess fair value after allocation to the intangible assets. The calculated goodwill is not deductible for tax purposes. Total acquisition-related costs for the Business Combination were approximately $3,164 thousand. Of the total acquisition-related costs, approximately $ 3,000 Measurement Period The preliminary purchase price allocations for the acquisitions described above are based on initial estimates and provisional amounts. In accordance with ASC 805-10-25-13, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, acquirer shall adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The Company continues to refine its inputs and estimates inherent in (i) the valuation of intangible assets, (ii) deferred income taxes, (iii) realization of tangible assets and (iv) the accuracy and completeness of liabilities. For the three months ended June 30, 2023 (Successor), the Company recognized a measurement period adjustment, which increased accrued liabilities, deferred tax liability and goodwill by approximately $78 thousand. CXApp Proforma Financial Information The following unaudited proforma financial information presents the condensed consolidated results of operations of the Company for the six month periods ended June 30, 2023, the six months ended June 30, 2022, and the three months ended June 30, 2022, as if the acquisition had occurred as of the beginning of the first period presented (January 1, 2022) instead of on March 14, 2023. The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods. The proforma financial information for the Company, including the predecessor information of KINS, and the acquired CXApp is as follows (in thousands): Schedule of proforma financial information For the For the For the Revenues $ 3,877 $ 4,731 $ 2,149 Net income (loss) $ (20,637 ) $ 5,235 $ (963 ) |
Disaggregation of Revenue
Disaggregation of Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Disaggregation Of Revenue | |
Disaggregation of Revenue | NOTE 4 – Disaggregation of Revenue The Company recognizes revenue when control is transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company derives revenue from software as a service, design and implementation services for its enterprise apps solutions systems, and professional services for work performed in conjunction with its systems. Revenues consisted of the following (in thousands): Schedule of disaggregation of Revenue Successor Predecessor Three Months Ended June 30, 2023 Period from Period from 2023 Three months ended Six Months Ended Subscription revenue Software $ 1,513 $ 1,753 $ 1,204 $ 1,362 $ 2,621 Total subscription revenue $ 1,513 $ 1,753 $ 1,204 $ 1,362 $ 2,621 Non-subscription revenue Professional services $ 402 $ 504 $ 416 $ 787 $ 2,110 Total non-subscription revenue $ 402 $ 504 $ 416 $ 787 $ 2,110 Total Revenue $ 1,915 $ 2,257 $ 1,620 $ 2,149 $ 4,731 Successor Predecessor Three Months Ended Period from Period from Three months ended Six Months Ended Revenue recognized over time (1)(2) $ 1,915 $ 2,257 $ 1,620 $ 2,149 $ 4,731 Total $ 1,915 $ 2,257 $ 1,620 $ 2,149 $ 4,731 (1) Professional services are also contracted on the fixed fee and time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company has generally elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date, in which revenue is recognized over time. (2) Software As A Service Subscription Revenue’s performance obligation is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized over time. |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | NOTE 5 – Property and Equipment, net Property and equipment consisted of the following (in thousands): Schedule of property and equipment Successor Predecessor June 30, December 31, Computer and office equipment $ 140 $ 992 Furniture and fixtures 12 185 Leasehold improvements 6 28 Software 1 8 Total 159 1,213 Less: accumulated depreciation and amortization (28 ) (1,011 ) Total Property and Equipment, Net $ 131 $ 202 Depreciation and amortization expense were approximately $ 24 28 19 30 66 |
Software Development Costs, net
Software Development Costs, net | 6 Months Ended |
Jun. 30, 2023 | |
Software Development Costs Net | |
Software Development Costs, net | NOTE 6 – Software Development Costs, net Capitalized software development costs consisted of the following (in thousands): Schedule of capitalized software development Successor Predecessor June 30, December 31, Capitalized software development costs $ - $ 2,680 Accumulated amortization - (2,193 ) Software development costs, net - 487 Amortization expense for capitalized software development costs was approximately $ 209 130 244 no |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | NOTE 7 – Goodwill and Intangible Assets The Company reviews goodwill for impairment on a reporting unit basis on December 31 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company noted that the carrying amount of Goodwill as of June 30, 2023 (Successor) was $ 44,200 As of June 30, 2022 (Predecessor), the Company’s goodwill balance and other assets with indefinite lives were evaluated for potential goodwill impairment as certain indications on a qualitative and a quantitative basis were identified that an impairment exists as of the reporting date primarily from a sustained decrease in the Parent’s stock price. During the three months ended June 30, 2022 (Predecessor) and for the six months ended June 30, 2022 (Predecessor), the Company recognized approximately $5,540 thousand of goodwill impairment. Goodwill consisted of the following (in thousands): Schedule of goodwill Acquisition Amount Balance as of March 15, 2023 $ - Acquisition of Legacy CXApp 44,122 Measurement Period Adjustments 78 Balance as of June 30, 2023 $ 44,200 Intangible assets consisted of the following (in thousands): Schedule of intangible assets June 30, 2023 December 31, 2022 (Predecessor) Weighted Average Remaining Gross Accumulated Amortization Net Carrying Gross Accumulated Net Carrying Trade Name/Trademarks 6.6 $ 3,294 $ (137 ) $ 3,157 $ 2,183 $ (725 ) $ 1,458 Customer Relationships 4.6 5,604 (327 ) 5,277 6,401 (1,765 ) 4,636 Developed Technology 9.6 9,268 (270 ) 8,998 15,179 (3,398 ) 11,781 Non-compete Agreements - - - - 3,150 (1,736 ) 1,414 Patents and Intellectual Property 9.6 2,703 (79 ) 2,624 - - - Totals $ 20,869 $ (813 ) $ 20,056 $ 26,913 $ (7,624 ) $ 19,289 Future amortization expense on intangible assets as of June 30, 2023 is anticipated to be as follows (in thousands): Schedule of future amortization expense For the Years Ending December 31, Amount 2023 $ 1,394 2024 2,788 2025 2,788 2026 2,788 2027 2,788 2028 and thereafter 7,510 Total $ 20,056 |
Deferred Revenue
Deferred Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Revenue | |
Deferred Revenue | NOTE 8 – Deferred Revenue Deferred revenue consisted of the following (in thousands): Schedule of deferred revenue Successor License Professional Total Deferred Revenue - March 15, 2023 $ 2,148 $ 386 $ 2,534 Revenue recognized (1,753 ) (504 ) (2,257 ) Revenue deferred 1,487 436 1,923 Deferred Revenue - June 30, 2023 $ 1,882 $ 318 $ 2,200 Predecessor License Professional Total Deferred Revenue - January 1, 2022 $ 2,524 $ 622 $ 3,146 Revenue recognized (2,997 ) (2,044 ) (5,041 ) Revenue deferred 2,493 1,854 4,347 Deferred Revenue - June 30, 2022 $ 2,020 $ 432 $ 2,452 The fair value of the deferred revenue approximates the services to be rendered. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | NOTE 9 – Accrued Liabilities Accrued liabilities consisted of the following (in thousands): Schedule of accrued Liabilities Successor Predecessor June 30, December 31, Insurance premiums and accrued interest $ 359 $ - Income tax payables 61 - Accrued services 120 - Accrued compensation and benefits 718 586 Accrued bonus and commissions 298 422 Accrued rent - 559 Accrued transaction costs 872 - Accrued other 504 83 Accrued sales and other indirect taxes payable 13 86 Accrued liabilities $ 2,945 $ 1,736 Financed Director & Officers Insurance The Company entered into a Directors & Officers (“D&O”) insurance agreement with Oakwood D&O Insurance, effective on March 14, 2023. The agreement states that the Company will pay a total of $ 671 8% 313 359 |
Warrant Liabilities
Warrant Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Warrant Liabilities | |
Warrant Liabilities | NOTE 10 – Warrant Liabilities As of June 30, 2023 (Successor) there were 13,800 11.50 Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) April 13, 2023 which is 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire on March 15, 2028 or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable, and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. The Company has filed a registration statement on Form S-1 (Registration No. 333-271340) under the Securities Act on April 19, 2023 covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants, and will use its commercially reasonable efforts to have it declared effective by the SEC within 60 business days following a Business Combination. The Company will use its commercially reasonable efforts to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but we will be required to use our commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. Redemptions of warrants when the price of Class A common stock equals or exceeds $ 18.00 ● In whole and not in part; ● At a price of $ 0.01 ● Upon not less than 30 30 ● If, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $ 18.00 20 30 third trading day If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of warrants when the price per share of Class A common stock equals or exceeds $ 10.00 ● In whole and not in part; ● At a price of $ 0.10 ● upon not less than 30 ● if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $ 10.00 ● if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto is available throughout the 30-day period after the written notice of redemption is given. As of June 30, 2023 (Successor), there were 10,280 30 |
Stock Option Plan and Stock-Bas
Stock Option Plan and Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Stock Option Plan And Stock-based Compensation | |
Stock Option Plan and Stock-Based Compensation | NOTE 11 – Stock Option Plan and Stock-Based Compensation To calculate the stock-based compensation resulting from the issuance of options the Company uses the Black-Scholes option pricing model, which is affected by the Company’s fair value of its stock price as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. 2023 Equity Incentive Plan At the special meeting held on March 10, 2023, the KINS stockholders considered and approved, among other things, the Incentive Plan. The Incentive Plan was previously approved, subject to stockholder approval, by KINS’ board of directors. The Incentive Plan became effective immediately upon the closing of the Business Combination. Pursuant to the terms of the Incentive Plan, there are 2,110,500 Employee Stock Options During the period from March 15, 2023 to June 30, 2023 (Successor), a total of 1,377 2 5 10 0.63 1.53 See below for a summary of the stock options granted under the Incentive Plan: Schedule of stock options Number of Weighted-average Weighted average Weighted-Average Fair Value at Options outstanding at March 15, 2023 - $ - - $ - Granted 1,377,172 1.53 Forfeited (392,272 ) 1.53 Options outstanding at June 30, 2023 984,900 $ 1.53 5.47 $ 0.61 Options exercisable at June 30, 2023 - $ - - The Company incurred stock-based compensation expenses associated with options of approximately $ 55 57 158 355 1,002 As of June 30, 2023 (Successor), the remaining unrecognized stock compensation expense totaled approximately $ 412 1.75 The fair value of each employee option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. Key weighted-average assumptions used to apply this pricing model during the period from March 15, 2023 to June 30, 2023 (Successor) were as follows: Schedule of assumptions used Risk-free interest rate 3.62% 3.67% Expected life of option grants 5 7 Expected volatility of underlying stock 37.35% Dividends assumption $ - Restricted Stock Units During the period from March 15, 2023 to June 30, 2023 (Successor), a total of 160 11.12 Restricted stock unit compensation expense was $ 41 As of June 30, 2023 (Successor), the Company has approximately $ 1,116 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 12 – Fair Value of Financial Instruments The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820. The Company noted that the only financial asset or financial liability that is subject to the fair value framework established in ASC 820 are the Warrant Liabilities (Note 10). The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The Company classified the public placement warrants recorded at fair value on a recurring basis of $ 7,452 5,551 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 13 – Income Taxes The Company recorded an income tax benefit of approximately $ 981 2,541 38 62 no The effective tax rate for three months ended June 30, 2023 (Successor) and for the period from March 15, 2023 to June 30, 2023 (Successor) was (6.24)% (17.51)% 4,354 |
Credit Risk and Concentrations
Credit Risk and Concentrations | 6 Months Ended |
Jun. 30, 2023 | |
Risks and Uncertainties [Abstract] | |
Credit Risk and Concentrations | NOTE 14 – Credit Risk and Concentrations Financial instruments that subject the Company to credit risk consist principally of trade accounts receivable and cash and cash equivalents. The Company performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk of its customers, establishes an allowance for credit losses and, consequently, believes that its accounts receivable credit risk exposure beyond such allowances is limited. The Company maintains cash deposits with financial institutions, which, from time to time, may exceed federally insured limits. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows. Cash is also maintained at foreign financial institutions for its Canadian and Philippines subsidiaries and its majority-owned India subsidiary. Cash in foreign financial institutions as of June 30, 2023 (Successor) was $195 thousand. Cash in foreign financial institutions as of December 31, 2022 (Predecessor) was not significant. The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash. |
Foreign Operations
Foreign Operations | 6 Months Ended |
Jun. 30, 2023 | |
Foreign Operations | |
Foreign Operations | NOTE 15 – Foreign Operations The Company’s operations are located primarily in the United States, Canada, and the Philippines. Revenues by geographic area are attributed by country of domicile of the Company’s subsidiaries. The financial data by geographic area are as follows (in thousands): Schedule of financial data by geographic area United States Canada India Philippines Eliminations Total For the Three Months Ended June 30, 2023 (Successor) Revenues by geographic area $ 1,550 $ 365 $ - $ 219 $ (219 ) $ 1,915 Operating income (loss) by geographic area $ (2,926 ) $ (766 ) $ - $ 9 $ - $ (3,683 ) Net income (loss) by geographic area $ (13,980 ) $ (761 ) $ - $ 11 $ - $ (14,730 ) For the Period from March 15, 2023 to June 30, 2023 (Successor) Revenues by geographic area $ 1,822 $ 435 $ - $ 415 $ (415 ) $ 2,257 Operating income (loss) by geographic area $ (3,412 ) $ (924 ) $ - $ 166 $ - $ (4,170 ) Net income (loss) by geographic area $ (11,200 ) $ (919 ) $ - $ 168 $ ( 21 ) $ (11,972 ) For the Period from January 1, 2023 to March 14, 2023 (Predecessor) Revenues by geographic area $ 1,395 $ 285 $ - $ 160 $ (220 ) $ 1,620 Operating income (loss) by geographic area $ (3,479 ) $ (905 ) $ - $ 3 $ - $ (4,381 ) Net income (loss) by geographic area $ (3,342 ) $ (1,041 ) $ - $ 3 $ - $ (4,380 ) For the Three Months Ended June 30, 2022 (Predecessor) Revenues by geographic area $ 1,718 $ 616 $ 144 $ - $ (329 ) $ 2,149 Operating income (loss) by geographic area $ (8,710 ) $ (2,067 ) $ (29 ) $ (26 ) $ (14 ) $ (10,846 ) Net income (loss) by geographic area $ (8,563 ) $ (2,460 ) $ 31 $ (28 ) $ (14 ) $ (11,034 ) For the Six Months Ended June 30, 2022 (Predecessor) Revenues by geographic area $ 3,885 $ 1,217 $ 414 $ - $ (785 ) $ 4,731 Operating income (loss) by geographic area $ (9,360 ) $ (3,075 ) $ 43 $ (26 ) $ - $ (12,418 ) Net income (loss) by geographic area $ (9,082 ) $ (3,599 ) $ 4 $ (28 ) $ - $ (12,705 ) As of June 30, 2023 (Successor) Identifiable assets by geographic area $ 71,911 $ 41 $ - $ 410 $ (73 ) $ 72,289 Long lived assets by geographic area $ 20,290 $ 386 $ - $ 195 $ - $ 20,871 Goodwill by geographic area $ 44,200 $ - $ - $ - $ - $ 44,200 As of December 31, 2022 (Predecessor) Identifiable assets by geographic area $ 24,591 $ 5,484 $ 228 $ 415 $ (1,438 ) $ 29,280 Long lived assets by geographic area $ 15,558 $ 4,788 $ 98 $ 215 $ - $ 20,659 Goodwill by geographic area $ - $ - $ - $ - $ - $ - |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Leases | NOTE 16 – Leases The Company has operating leases for administrative offices in Canada, the Philippines, and the United States. The Manila, Philippines office lease expires in May 2025, the Canada lease expires in June 2026, and the United States office lease expires in May 2024. The Company has no other operating or financing leases with terms greater than 12 months. Lease expense for operating leases recorded on the balance sheet is based on the future minimum lease payments recognized on a straight-line basis over the term of the lease plus any variable lease costs. Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in the Company’s condensed consolidated statement of operations for the three months ended June 30, 2023 (Successor), for the period from March 15, 2023 to June 30, 2023 (Successor), for the period from January 1, 2023 to March 14, 2023 (Predecessor), for the three months ended June 30, 2022 (Predecessor), and for the six months ended June 30, 2022 (Predecessor) was approximately $ 56 65 57 203 300 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the date of adoption of ASC 842 “Leases” (“ASC 842”). As of June 30, 2023 (Successor), the weighted average remaining lease term is 2.7 8.0% 2.8 8.0% |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 17 – Commitments and Contingencies Litigation Certain conditions may exist as of the date the financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 18 – Subsequent Events Warrant Exchange Agreement On July 14, 2023, the Company entered into a Warrant Exchange Agreement (the “Agreement”) with an unaffiliated third party investor (the “Warrant Holder”) with respect to warrants to purchase an aggregate of 2,000 0.0001 600 Exercise of Warrants The Company notes that from July 1, 2023 to the date of these financial statements (August 14, 2023), warrant holders have redeemed approximately 435 11.50 5,003 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Liquidity | Liquidity As of June 30, 2023 (Successor) the Company had a working capital deficit of approximately $ 12,126 4,543 14,730 11,972 6,598 4,399 435 11.50 5,003 The Company cannot assure that it will ever earn revenues sufficient to support their operations, or that it will ever achieve profitable operations. The Company’s recurring losses and utilization of cash in its operations are indicators of substantial doubt that the entity can continue as a going concern however with the Company’s current liquidity position the Company has taken steps to reduce operating expenses resulting in a more efficient cost structure. The Company intends to finance its future working capital requirements and capital expenditures from cash generated from operating activities and may consider raising funds from equity financings. Management believes that the actions presently being taken to further implement its business plan and generate its revenues provide the opportunity for the Company to continue as a going concern for at least 12 months from the issuance of these condensed consolidated financial statements. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect for the twelve months from the issuance of these condensed consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of: ● the valuation of stock-based compensation; ● the valuation of warrant liabilities; ● the allowance for credit losses; ● the valuation allowance for deferred tax assets; and ● impairment of long-lived assets and goodwill. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash, checking accounts, money market accounts, temporary investments and certificates of deposit with maturities of three months or less when purchased. As of June 30, 2023 (Successor), the Company had cash equivalents of approximately $3,863 thousand of certificates of deposit held by a number of banks limited to $250 thousand per bank with a duration of 90 days or less. As of December 31, 2022 (Predecessor), the Company had no cash equivalents. |
Accounts Receivable, net and Allowance for Credit Losses | Accounts Receivable, net and Allowance for Credit Losses Accounts receivables are stated at the amount the Company expects to collect. The Company recognizes an allowance for credit losses to ensure accounts receivables are not overstated due to un-collectability. Bad debt reserves are maintained for various customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings, or deterioration in such customer’s operating results or financial position. If circumstances related to a customer change, estimates of the recoverability of receivables would be further adjusted. The Company’s allowance for credit losses is not significant as of June 30, 2023 (Successor) and December 31, 2022 (Predecessor). |
Property and Equipment, net | Property and Equipment, net Property and equipment are recorded at cost, less accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting purposes using the straight-line method over the estimated useful lives of the assets, which range from 5 10 |
Intangible Assets | Intangible Assets Intangible assets primarily consist of developed technology, customer lists/relationships, non-compete agreements, intellectual property agreements, export licenses and trade names/trademarks. They are amortized ratably over a range of 5 10 |
Goodwill | Goodwill The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit is the entire company, due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company calculates the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations. Based on its assessments, the Company did not incur any impairment charges for the three months ended June 30, 2023 (Successor), for the period from March 15, 2023 to June 30, 2023 (Successor), and for the period from January 1, 2023 to March 14, 2023 (Predecessor). The Company incurred an impairment charge of approximately $ 5,540 |
Leases and Right-of-Use Assets | Leases and Right-of-Use Assets The Company determines if an arrangement is a lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company generally uses their incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known. Right-of-use assets related to the Company’s operating lease liabilities are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives. The Company’s lease terms that are used in determining their operating lease liabilities at lease inception may include options to extend or terminate the leases when it is reasonably certain that the Company will exercise such options. The Company amortizes their right-of-use assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses. The Company does not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Income tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. |
Comprehensive Income (Loss) and Foreign Currency Translation | Comprehensive Income (Loss) and Foreign Currency Translation The Company reports comprehensive income (loss) and its components in its unaudited condensed consolidated financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments, affecting stockholders’ equity that, under GAAP, are excluded from net loss. Assets and liabilities related to the Company’s foreign operations are calculated using the Philippine Peso and Canadian Dollar, and are translated at end-of-period exchange rates, while the related revenues and expenses are translated at average exchange rates prevailing during the period. Gains or losses resulting from transactions denominated in foreign currencies are included in general and administrative expenses in the unaudited condensed consolidated statements of operations. The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S. dollar. Aggregate foreign currency net transaction losses were not material for the three months ended June 30, 2023 (Successor), for the period from March 15, 2023 to June 30, 2023 (Successor), for the period from January 1, 2023 to March 14, 2023 (Predecessor), for the three months ended June 30, 2022 (Predecessor), and for the six months ended June 30, 2022 (Predecessor). |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when control is transferred of the promised products or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company derives revenue from its software as a service for cloud based software, as well as design, implementation and other professional services for work performed in conjunction with its cloud based software. The Company enters into contracts with its customers whereby it grants a non-exclusive cloud-based license for the use of its proprietary software and for professional services. The contracts may also provide for on-going services for a specified price, which may include maintenance services, designated support, and enhancements, upgrades and improvements to the software, depending on the contract. Licenses for cloud software provide the customer with a right to use the software as it exists when made available to the customer. All software provides customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. License Subscription Revenue Recognition (Software As A Service) With respect to sales of the Company’s license agreements, customers generally pay fixed annual fees in advance in exchange for the Company’s software service provided via electronic means, which are generally recognized ratably over the license term. Some agreements allow the customer to terminate their subscription contracts before the end of the applicable term, and in such cases the customer is generally entitled to a refund pro-rata but only for the elapsed time remaining at the point of termination, which would approximate the deferred revenue at such time. The Company’s performance obligation is satisfied over time as the electronic services are provided continuously throughout the service period. The Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous access to its service. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer approved invoice. The timing of the Company’s revenue recognition related to the licensing revenue stream is dependent on whether the software licensing agreement entered into represents a service. Software that relies on an entity’s IP and is delivered only through a hosting arrangement, where the customer cannot take possession of the software, is a service. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Renewals or extensions of licenses are evaluated as distinct licenses and revenue attributed to the distinct service is not recognized until (1) the entity provides the distinct license (or makes the license available) to the customer and (2) the customer is able to use and benefit from the distinct license. Renewal contracts are not combined with original contracts, and, as a result, the renewal right is evaluated in the same manner as all other additional rights granted after the initial contract. The revenue is not recognized until the customer can begin to use and benefit from the license, which is typically at the beginning of the license renewal period. The Company recognizes revenue resulting from renewal of licensed software over time. Professional Services Revenue Recognition The Company’s professional services include milestone, fixed fee and time and materials contracts. Professional services under milestone contracts are accounted for using the percentage of completion method. As soon as the outcome of a contract can be estimated reliably, contract revenue is recognized in the statement of operations in proportion to the stage of completion of the contract. Contract costs are expensed as incurred. Contract costs include all amounts that relate directly to the specific contract, are attributable to contract activity, and are specifically chargeable to the customer under the terms of the contract. Professional services are also contracted on the fixed fee and in some cases on a time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company’s time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date. For fixed fee contracts provided by in house personnel, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Because the Company’s contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Anticipated losses are recognized as soon as they become known. For the three months ended June 30, 2023 (Successor), for the period from March 15, 2023 to June 30, 2023 (Successor), for the period from January 1, 2023 to March 14, 2023 (Predecessor), three months ended June 30, 2022 (Predecessor), and six months ended June 30, 2022 (Predecessor), the Company did not incur any such losses. These amounts are based on known and estimated factors. Contract Balances The timing of the Company’s revenue recognition may differ from the timing of invoicing to and payment by its customers. The Company records an unbilled receivable when revenue is recognized prior to invoicing and the Company has an unconditional right to payment. Alternatively, when invoicing a customer precedes the Company providing of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $ 2,200 2,162 729 865 2,198 Costs to Obtain a Contract The Company recognizes eligible sales commissions as an asset within prepaid expenses and other current assets as the commissions are an incremental cost of obtaining a contract with the customer and the Company expects to recover these costs. The capitalized costs are amortized over the expected contract term. Cost to Fulfill a Contract The Company incurs costs to fulfill their obligations under a contract once it has obtained the contract. These costs are generally not significant and are recorded to expense as incurred. Multiple Performance Obligations The Company enters into contracts with customers for its technology that include multiple performance obligations. Each distinct performance obligation was determined by whether the customer could benefit from the good or service on its own or together with readily available resources. The Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company’s process for determining standalone selling price considers multiple factors including the Company’s internal pricing model and market trends that may vary depending upon the facts and circumstances related to each performance obligation. Sales and Use Taxes The Company presents transactional taxes such as sales and use tax collected from customers and remitted to government authorities on a net basis. Shipping and Handling Costs Shipping and handling costs are expensed as incurred as part of cost of revenues. These costs were deemed to be de minimus during each of the reporting periods. |
Business Combinations | Business Combinations The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the accounts and results of operations are included as of and subsequent to the acquisition date. |
Segments | Segments The Company and its Chief Executive Officer (“CEO”), acting as the Chief Operating Decision Maker (“CODM”) determines its reporting units in accordance with FASB ASC 280, “Segment Reporting” (“ASC 280”). The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated. The Company has one operating segment and reporting unit. The Company is organized and operated as one business. Management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The Company has issued stock-based compensation awards in the form of options and restricted stock units. Fair value for options and restricted stock units are valued using the closing price of the Company’s common stock on the date of grant. The grant date fair value is recognized over the requisite service period during which an employee and non-employee is required to provide service in exchange for the award. The grant date fair value of options is estimated using the Black-Scholes option pricing model based on the average of the high and low stock prices at the grant date for awards under the CXApp Inc. 2023 Equity Incentive Plan (the “Incentive Plan”). The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield is assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The Company uses the simplified method to estimate the expected term. The Company estimates forfeitures at the time of grant and revises these estimates in subsequent periods if actual forfeitures differ from those estimates. |
Derivative Warrant Liabilities | Derivative Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. The Company currently has two sets of warrants outstanding, known as the Private Placement Warrants and the Public Warrants, which are both classified as a liability. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance or modification. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance as a warrant liability, and adjusted to the then fair value in each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations and amounted to approximately $ 12,040 10,354 |
Earnings Per Share | Earnings Per Share The Company computes basic and diluted earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. For the three months ended June 30, 2023 (Successor) and for the period from March 15, 2023 to June 30, 2023 (Successor) basic and dilutive net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options, warrants, and vesting of restricted units in the calculation of diluted net loss per common shares would have been anti-dilutive. The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the three months ended June 30, 2023 (Successor) and for the period from March 15, 2023 to June 30, 2023 (Successor). Schedule of antidilutive shares Successor (in thousands) Three Months Ended Period from Stock options 985 985 Restricted stock units 160 160 Warrants 24,080 24,080 Total 25,225 25,225 |
Fair Value Measurements | Fair Value Measurements FASB ASC 820, “Fair Value Measurements” (“ASC 820”), provides guidance on the development and disclosure of fair value measurements. The Company follows this authoritative guidance for fair value measurements, which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and expands disclosures about fair value measurements. The guidance requires fair value measurements be classified and disclosed in one of the following three categories: ● Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. ● Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. ● Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management. Fair value measurements are applied, when applicable, to determine the fair value of the Company’s warrant liability at each reporting period. See Note 10. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial instruments consist of cash and cash equivalents, accounts receivable, notes and other receivables and accounts payable. The Company determines the estimated fair value of such financial instruments presented in these financial statements using available market information and appropriate methodologies. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature. |
Carrying Value, Recoverability and Impairment of Long-Lived Assets | Carrying Value, Recoverability and Impairment of Long-Lived Assets The Company follows FASB ASC 360 “Property, Plant, and Equipment” (“ASC 360”) for its long-lived assets. Pursuant to ASC 360-10-35-17, an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited. Pursuant to ASC 360-10-35-21, the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Based on its assessments, the Company recorded no Recently Issued Accounting Standards Not Yet Adopted In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)”, which updates codification on how an entity would apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards should be accounted for in accordance with Topic 718, Compensation—Stock Compensation. The effective date of this update is for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently assessing potential impacts of ASU 2023-03 and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements and disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of antidilutive shares | Schedule of antidilutive shares Successor (in thousands) Three Months Ended Period from Stock options 985 985 Restricted stock units 160 160 Warrants 24,080 24,080 Total 25,225 25,225 |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of assets acquired | Schedule of assets acquired Description Fair Value Weighted Average Purchase Price $ 69,928 Assets acquired: Cash and cash equivalents $ 10,003 Accounts receivable 2,226 Notes and other receivables 209 Prepaid assets and other current assets 588 Operating lease right of use asset 557 Property and equipment, net 133 Other assets 42 Developed technology 9,268 10 Patents 2,703 10 Customer relationships 5,604 5 Tradenames and trademarks 3,294 7 Total assets acquired $ 34,627 Liabilities assumed: Accounts payable $ 461 Accrued liabilities 972 Deferred revenues 2,534 Operating lease obligation, current 194 Operating lease obligation, noncurrent 384 Deferred tax liability 4,354 Total liabilities assumed 8,899 Goodwill $ 44,200 |
Schedule of proforma financial information | Schedule of proforma financial information For the For the For the Revenues $ 3,877 $ 4,731 $ 2,149 Net income (loss) $ (20,637 ) $ 5,235 $ (963 ) |
Disaggregation of Revenue (Tabl
Disaggregation of Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Disaggregation Of Revenue | |
Schedule of disaggregation of Revenue | Schedule of disaggregation of Revenue Successor Predecessor Three Months Ended June 30, 2023 Period from Period from 2023 Three months ended Six Months Ended Subscription revenue Software $ 1,513 $ 1,753 $ 1,204 $ 1,362 $ 2,621 Total subscription revenue $ 1,513 $ 1,753 $ 1,204 $ 1,362 $ 2,621 Non-subscription revenue Professional services $ 402 $ 504 $ 416 $ 787 $ 2,110 Total non-subscription revenue $ 402 $ 504 $ 416 $ 787 $ 2,110 Total Revenue $ 1,915 $ 2,257 $ 1,620 $ 2,149 $ 4,731 Successor Predecessor Three Months Ended Period from Period from Three months ended Six Months Ended Revenue recognized over time (1)(2) $ 1,915 $ 2,257 $ 1,620 $ 2,149 $ 4,731 Total $ 1,915 $ 2,257 $ 1,620 $ 2,149 $ 4,731 (1) Professional services are also contracted on the fixed fee and time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company has generally elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date, in which revenue is recognized over time. (2) Software As A Service Subscription Revenue’s performance obligation is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized over time. |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Schedule of property and equipment Successor Predecessor June 30, December 31, Computer and office equipment $ 140 $ 992 Furniture and fixtures 12 185 Leasehold improvements 6 28 Software 1 8 Total 159 1,213 Less: accumulated depreciation and amortization (28 ) (1,011 ) Total Property and Equipment, Net $ 131 $ 202 |
Software Development Costs, n_2
Software Development Costs, net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Software Development Costs Net | |
Schedule of capitalized software development | Schedule of capitalized software development Successor Predecessor June 30, December 31, Capitalized software development costs $ - $ 2,680 Accumulated amortization - (2,193 ) Software development costs, net - 487 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | Schedule of goodwill Acquisition Amount Balance as of March 15, 2023 $ - Acquisition of Legacy CXApp 44,122 Measurement Period Adjustments 78 Balance as of June 30, 2023 $ 44,200 |
Schedule of intangible assets | Schedule of intangible assets June 30, 2023 December 31, 2022 (Predecessor) Weighted Average Remaining Gross Accumulated Amortization Net Carrying Gross Accumulated Net Carrying Trade Name/Trademarks 6.6 $ 3,294 $ (137 ) $ 3,157 $ 2,183 $ (725 ) $ 1,458 Customer Relationships 4.6 5,604 (327 ) 5,277 6,401 (1,765 ) 4,636 Developed Technology 9.6 9,268 (270 ) 8,998 15,179 (3,398 ) 11,781 Non-compete Agreements - - - - 3,150 (1,736 ) 1,414 Patents and Intellectual Property 9.6 2,703 (79 ) 2,624 - - - Totals $ 20,869 $ (813 ) $ 20,056 $ 26,913 $ (7,624 ) $ 19,289 |
Schedule of future amortization expense | Schedule of future amortization expense For the Years Ending December 31, Amount 2023 $ 1,394 2024 2,788 2025 2,788 2026 2,788 2027 2,788 2028 and thereafter 7,510 Total $ 20,056 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Revenue | |
Schedule of deferred revenue | Schedule of deferred revenue Successor License Professional Total Deferred Revenue - March 15, 2023 $ 2,148 $ 386 $ 2,534 Revenue recognized (1,753 ) (504 ) (2,257 ) Revenue deferred 1,487 436 1,923 Deferred Revenue - June 30, 2023 $ 1,882 $ 318 $ 2,200 Predecessor License Professional Total Deferred Revenue - January 1, 2022 $ 2,524 $ 622 $ 3,146 Revenue recognized (2,997 ) (2,044 ) (5,041 ) Revenue deferred 2,493 1,854 4,347 Deferred Revenue - June 30, 2022 $ 2,020 $ 432 $ 2,452 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of accrued Liabilities | Schedule of accrued Liabilities Successor Predecessor June 30, December 31, Insurance premiums and accrued interest $ 359 $ - Income tax payables 61 - Accrued services 120 - Accrued compensation and benefits 718 586 Accrued bonus and commissions 298 422 Accrued rent - 559 Accrued transaction costs 872 - Accrued other 504 83 Accrued sales and other indirect taxes payable 13 86 Accrued liabilities $ 2,945 $ 1,736 |
Stock Option Plan and Stock-B_2
Stock Option Plan and Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Stock Option Plan And Stock-based Compensation | |
Schedule of stock options | Schedule of stock options Number of Weighted-average Weighted average Weighted-Average Fair Value at Options outstanding at March 15, 2023 - $ - - $ - Granted 1,377,172 1.53 Forfeited (392,272 ) 1.53 Options outstanding at June 30, 2023 984,900 $ 1.53 5.47 $ 0.61 Options exercisable at June 30, 2023 - $ - - |
Schedule of assumptions used | Schedule of assumptions used Risk-free interest rate 3.62% 3.67% Expected life of option grants 5 7 Expected volatility of underlying stock 37.35% Dividends assumption $ - |
Foreign Operations (Tables)
Foreign Operations (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Foreign Operations | |
Schedule of financial data by geographic area | Schedule of financial data by geographic area United States Canada India Philippines Eliminations Total For the Three Months Ended June 30, 2023 (Successor) Revenues by geographic area $ 1,550 $ 365 $ - $ 219 $ (219 ) $ 1,915 Operating income (loss) by geographic area $ (2,926 ) $ (766 ) $ - $ 9 $ - $ (3,683 ) Net income (loss) by geographic area $ (13,980 ) $ (761 ) $ - $ 11 $ - $ (14,730 ) For the Period from March 15, 2023 to June 30, 2023 (Successor) Revenues by geographic area $ 1,822 $ 435 $ - $ 415 $ (415 ) $ 2,257 Operating income (loss) by geographic area $ (3,412 ) $ (924 ) $ - $ 166 $ - $ (4,170 ) Net income (loss) by geographic area $ (11,200 ) $ (919 ) $ - $ 168 $ ( 21 ) $ (11,972 ) For the Period from January 1, 2023 to March 14, 2023 (Predecessor) Revenues by geographic area $ 1,395 $ 285 $ - $ 160 $ (220 ) $ 1,620 Operating income (loss) by geographic area $ (3,479 ) $ (905 ) $ - $ 3 $ - $ (4,381 ) Net income (loss) by geographic area $ (3,342 ) $ (1,041 ) $ - $ 3 $ - $ (4,380 ) For the Three Months Ended June 30, 2022 (Predecessor) Revenues by geographic area $ 1,718 $ 616 $ 144 $ - $ (329 ) $ 2,149 Operating income (loss) by geographic area $ (8,710 ) $ (2,067 ) $ (29 ) $ (26 ) $ (14 ) $ (10,846 ) Net income (loss) by geographic area $ (8,563 ) $ (2,460 ) $ 31 $ (28 ) $ (14 ) $ (11,034 ) For the Six Months Ended June 30, 2022 (Predecessor) Revenues by geographic area $ 3,885 $ 1,217 $ 414 $ - $ (785 ) $ 4,731 Operating income (loss) by geographic area $ (9,360 ) $ (3,075 ) $ 43 $ (26 ) $ - $ (12,418 ) Net income (loss) by geographic area $ (9,082 ) $ (3,599 ) $ 4 $ (28 ) $ - $ (12,705 ) As of June 30, 2023 (Successor) Identifiable assets by geographic area $ 71,911 $ 41 $ - $ 410 $ (73 ) $ 72,289 Long lived assets by geographic area $ 20,290 $ 386 $ - $ 195 $ - $ 20,871 Goodwill by geographic area $ 44,200 $ - $ - $ - $ - $ 44,200 As of December 31, 2022 (Predecessor) Identifiable assets by geographic area $ 24,591 $ 5,484 $ 228 $ 415 $ (1,438 ) $ 29,280 Long lived assets by geographic area $ 15,558 $ 4,788 $ 98 $ 215 $ - $ 20,659 Goodwill by geographic area $ - $ - $ - $ - $ - $ - |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Successor [Member] - shares shares in Thousands | 3 Months Ended | 4 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Total | 25,225 | 25,225 |
Stock Options [Member] | ||
Total | 985 | 985 |
Restricted Stock Units (RSUs) [Member] | ||
Total | 160 | 160 |
Warrant [Member] | ||
Total | 24,080 | 24,080 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | |||
Aug. 14, 2023 | Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Successor [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Working capital | $ 12,126 | $ 12,126 | ||||||
Cash and cash equivalents | 4,543 | 4,543 | ||||||
Net income | 14,730 | 11,972 | ||||||
Cash for operating activities | 6,598 | (6,598) | ||||||
Reduction in accrued liabilities | 4,399 | $ 4,399 | ||||||
Cash and cash equivalents, description | As of June 30, 2023 (Successor), the Company had cash equivalents of approximately $3,863 thousand of certificates of deposit held by a number of banks limited to $250 thousand per bank with a duration of 90 days or less. As of December 31, 2022 (Predecessor), the Company had no cash equivalents. | |||||||
Impairment charge on goodwill | ||||||||
Deferred Revenue | $ 2,534 | 2,200 | 2,200 | |||||
Revenue Recognized | 729 | |||||||
Changes in estimated fair value of warrants | 12,040 | 10,354 | ||||||
Impairment charges of long-lived assets | $ 0 | $ 0 | ||||||
Successor [Member] | Minimum [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Property and equipment, net useful life | 5 years | 5 years | ||||||
Intangible assets useful life | 5 years | 5 years | ||||||
Successor [Member] | Maximum [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Property and equipment, net useful life | 10 years | 10 years | ||||||
Intangible assets useful life | 10 years | 10 years | ||||||
Successor [Member] | Subsequent Event [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Number of public warrants exercised | 435 | |||||||
Strike price | $ 11.50 | |||||||
Proceeds from public warrants exercised | $ 5,003 | |||||||
Predecessor [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Cash and cash equivalents | $ 6,308 | |||||||
Net income | 4,380 | $ 11,034 | $ 12,705 | |||||
Cash for operating activities | (5,144) | (7,386) | ||||||
Impairment charge on goodwill | 5,540 | 5,540 | ||||||
Deferred Revenue | 2,452 | 2,452 | $ 2,162 | $ 3,146 | ||||
Revenue Recognized | 865 | 2,198 | ||||||
Impairment charges of long-lived assets | $ 0 | $ 0 | $ 0 |
Business Combination (Details)
Business Combination (Details) - Predecessor [Member] $ in Thousands | 2 Months Ended |
Mar. 14, 2023 USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Purchase Price | $ 69,928 |
Assets acquired: | |
Cash and cash equivalents | 10,003 |
Accounts receivable | 2,226 |
Notes and other receivables | 209 |
Prepaid assets and other current assets | 588 |
Operating lease right of use asset | 557 |
Property and equipment, net | 133 |
Other assets | 42 |
Total assets acquired | 34,627 |
Liabilities assumed: | |
Accounts payable | 461 |
Accrued liabilities | 972 |
Deferred revenues | 2,534 |
Operating lease obligation, current | 194 |
Operating lease obligation, noncurrent | 384 |
Deferred tax liability | 4,354 |
Total liabilities assumed | 8,899 |
Goodwill | 44,200 |
Developed Technology Rights [Member] | |
Assets acquired: | |
Intangible assets | $ 9,268 |
Weighted Average Useful Life | 10 years |
Patents [Member] | |
Assets acquired: | |
Intangible assets | $ 2,703 |
Weighted Average Useful Life | 10 years |
Customer Relationships [Member] | |
Assets acquired: | |
Intangible assets | $ 5,604 |
Weighted Average Useful Life | 5 years |
Trademarks and Trade Names [Member] | |
Assets acquired: | |
Intangible assets | $ 3,294 |
Weighted Average Useful Life | 7 years |
Business Combination (Details 1
Business Combination (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |||
Revenues | $ 2,149 | $ 3,877 | $ 4,731 |
Net income (loss) | $ (963) | $ (20,637) | $ 5,235 |
Business Combination (Details N
Business Combination (Details Narrative) - Predecessor [Member] - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 3 Months Ended | 6 Months Ended |
Mar. 14, 2023 | Jun. 30, 2022 | Jun. 30, 2022 | |
Business Acquisition [Line Items] | |||
Share price | $ 9.94 | ||
Business combination goodwill | $ 44,200 | ||
Acquisition-related costs | $ 16 | $ 16 | |
KINS [Member] | |||
Business Acquisition [Line Items] | |||
Acquisition-related costs | 3,000 | ||
Merger Agreement [Member] | |||
Business Acquisition [Line Items] | |||
Aggregate purchase price assets and liabilities | 69,928 | ||
Business combination goodwill | $ 44,200 | ||
Merger Agreement [Member] | Common Class A [Member] | |||
Business Acquisition [Line Items] | |||
Consideration transferred in connection | 1,547,700 | ||
Merger Agreement [Member] | Common Class C [Member] | |||
Business Acquisition [Line Items] | |||
Consideration transferred in connection | 5,487,300 |
Disaggregation of Revenue (Deta
Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||
Successor [Member] | ||||||
Total Revenue | $ 1,915 | $ 2,257 | ||||
Successor [Member] | Transferred over Time [Member] | ||||||
Total Revenue | [1],[2] | 1,915 | 2,257 | |||
Successor [Member] | Subscription Revenue [Member] | ||||||
Total Revenue | 1,513 | 1,753 | ||||
Successor [Member] | Subscription Revenue [Member] | Software [Member] | ||||||
Total Revenue | 1,513 | 1,753 | ||||
Successor [Member] | Non Subscription Revenue [Member] | ||||||
Total Revenue | 402 | 504 | ||||
Successor [Member] | Non Subscription Revenue [Member] | Professional Services [Member] | ||||||
Total Revenue | $ 402 | $ 504 | ||||
Predecessor [Member] | ||||||
Total Revenue | $ 1,620 | $ 2,149 | $ 4,731 | |||
Predecessor [Member] | Transferred over Time [Member] | ||||||
Total Revenue | [1],[2] | 1,620 | 2,149 | 4,731 | ||
Predecessor [Member] | Subscription Revenue [Member] | ||||||
Total Revenue | 1,204 | 1,362 | 2,621 | |||
Predecessor [Member] | Subscription Revenue [Member] | Software [Member] | ||||||
Total Revenue | 1,204 | 1,362 | 2,621 | |||
Predecessor [Member] | Non Subscription Revenue [Member] | ||||||
Total Revenue | 416 | 787 | 2,110 | |||
Predecessor [Member] | Non Subscription Revenue [Member] | Professional Services [Member] | ||||||
Total Revenue | $ 416 | $ 787 | $ 2,110 | |||
[1]Professional services are also contracted on the fixed fee and time and materials basis. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. The Company has generally elected the practical expedient to recognize revenue for the right to invoice because the Company’s right to consideration corresponds directly with the value to the customer of the performance completed to date, in which revenue is recognized over time.[2]Software As A Service Subscription Revenue’s performance obligation is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized over time. |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Successor [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 159 | |
Less: accumulated depreciation and amortization | (28) | |
Total Property and Equipment, Net | 131 | |
Successor [Member] | Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 140 | |
Successor [Member] | Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 12 | |
Successor [Member] | Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 6 | |
Successor [Member] | Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 1 | |
Predecessor [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 1,213 | |
Less: accumulated depreciation and amortization | (1,011) | |
Total Property and Equipment, Net | 202 | |
Predecessor [Member] | Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 992 | |
Predecessor [Member] | Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 185 | |
Predecessor [Member] | Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 28 | |
Predecessor [Member] | Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 8 |
Property and Equipment, net (_2
Property and Equipment, net (Details Narrative) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | |
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Successor [Member] | |||||
Depreciation and amortization expense | $ 24 | $ 28 | |||
Predecessor [Member] | |||||
Depreciation and amortization expense | $ 19 | $ 30 | $ 66 |
Software Development Costs, n_3
Software Development Costs, net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Successor [Member] | ||
Capitalized software development costs | ||
Accumulated amortization | ||
Software development costs, net | ||
Predecessor [Member] | ||
Capitalized software development costs | $ 2,680 | |
Accumulated amortization | (2,193) | |
Software development costs, net | $ 487 |
Software Development Costs, n_4
Software Development Costs, net (Details Narrative) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | |
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Predecessor [Member] | |||||
Amortization expense | $ 209 | $ 130 | $ 244 | ||
Successor [Member] | |||||
Amortization expense | $ 0 | $ 0 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - Successor [Member] $ in Thousands | 4 Months Ended |
Jun. 30, 2023 USD ($) | |
Beginning balance | |
Acquisition of Legacy CXApp | 44,122 |
Measurement Period Adjustments | 78 |
Ending balance | $ 44,200 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Successor [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 20,869 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (813) | |
Net carrying amount | $ 20,056 | |
Successor [Member] | Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining weighted average useful life | 6 years 7 months 6 days | |
Gross carrying amount | $ 3,294 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (137) | |
Net carrying amount | $ 3,157 | |
Successor [Member] | Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining weighted average useful life | 4 years 7 months 6 days | |
Gross carrying amount | $ 5,604 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (327) | |
Net carrying amount | $ 5,277 | |
Successor [Member] | Developed Technology Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining weighted average useful life | 9 years 7 months 6 days | |
Gross carrying amount | $ 9,268 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (270) | |
Net carrying amount | 8,998 | |
Successor [Member] | Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | ||
Finite-Lived Intangible Assets, Accumulated Amortization | ||
Net carrying amount | ||
Successor [Member] | Patents And Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining weighted average useful life | 9 years 7 months 6 days | |
Gross carrying amount | $ 2,703 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (79) | |
Net carrying amount | $ 2,624 | |
Predecessor [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 26,913 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (7,624) | |
Net carrying amount | 19,289 | |
Predecessor [Member] | Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 2,183 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (725) | |
Net carrying amount | 1,458 | |
Predecessor [Member] | Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 6,401 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (1,765) | |
Net carrying amount | 4,636 | |
Predecessor [Member] | Developed Technology Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 15,179 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (3,398) | |
Net carrying amount | 11,781 | |
Predecessor [Member] | Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 3,150 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (1,736) | |
Net carrying amount | 1,414 | |
Predecessor [Member] | Patents And Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | ||
Finite-Lived Intangible Assets, Accumulated Amortization | ||
Net carrying amount |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details 2) $ in Thousands | Jun. 30, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 | $ 1,394 |
2024 | 2,788 |
2025 | 2,788 |
2026 | 2,788 |
2027 | 2,788 |
2028 and thereafter | 7,510 |
Total | $ 20,056 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2023 | Mar. 14, 2023 |
Successor [Member] | ||
Goodwill | $ 44,200 |
Deferred Revenue (Details)
Deferred Revenue (Details) - USD ($) $ in Thousands | 4 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2022 | |
Successor [Member] | ||
Deferred revenue, beginning balance | $ 2,534 | |
Revenue recognized | (2,257) | |
Revenue deferred | 1,923 | |
Deferred revenue, ending balance | 2,200 | |
Successor [Member] | Licensing Agreements [Member] | ||
Deferred revenue, beginning balance | 2,148 | |
Revenue recognized | (1,753) | |
Revenue deferred | 1,487 | |
Deferred revenue, ending balance | 1,882 | |
Successor [Member] | Professional Service Agreements [Member] | ||
Deferred revenue, beginning balance | 386 | |
Revenue recognized | (504) | |
Revenue deferred | 436 | |
Deferred revenue, ending balance | $ 318 | |
Predecessor [Member] | ||
Deferred revenue, beginning balance | $ 3,146 | |
Revenue recognized | (5,041) | |
Revenue deferred | 4,347 | |
Deferred revenue, ending balance | 2,452 | |
Predecessor [Member] | Licensing Agreements [Member] | ||
Deferred revenue, beginning balance | 2,524 | |
Revenue recognized | (2,997) | |
Revenue deferred | 2,493 | |
Deferred revenue, ending balance | 2,020 | |
Predecessor [Member] | Professional Service Agreements [Member] | ||
Deferred revenue, beginning balance | 622 | |
Revenue recognized | (2,044) | |
Revenue deferred | 1,854 | |
Deferred revenue, ending balance | $ 432 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Successor [Member] | ||
Insurance premiums and accrued interest | $ 359 | |
Income tax payables | 61 | |
Accrued services | 120 | |
Accrued compensation and benefits | 718 | |
Accrued bonus and commissions | 298 | |
Accrued rent | ||
Accrued transaction costs | 872 | |
Accrued other | 504 | |
Accrued sales and other indirect taxes payable | 13 | |
Accrued liabilities | $ 2,945 | |
Predecessor [Member] | ||
Insurance premiums and accrued interest | ||
Income tax payables | ||
Accrued services | ||
Accrued compensation and benefits | 586 | |
Accrued bonus and commissions | 422 | |
Accrued rent | 559 | |
Accrued transaction costs | ||
Accrued other | 83 | |
Accrued sales and other indirect taxes payable | 86 | |
Accrued liabilities | $ 1,736 |
Accrued Liabilities (Details Na
Accrued Liabilities (Details Narrative) - USD ($) $ in Thousands | 2 Months Ended | 4 Months Ended |
Mar. 14, 2023 | Jun. 30, 2023 | |
Predecessor [Member] | ||
Interest rate | 8% | |
Predecessor [Member] | Director And Officers [Member] | ||
Debt payment | $ 671 | |
Successor [Member] | ||
Payment of premiums | $ 313 | |
Debt owed balance | $ 359 |
Warrant Liabilities (Details Na
Warrant Liabilities (Details Narrative) - Successor [Member] shares in Thousands | 4 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Warrants outstanding | shares | 13,800 |
Warrant Price | $ 11.50 |
Public Warrants [Member] | |
Restrictions on transfer period of time after business combination completion | 30 days |
Private Placement Warrants [Member] | |
Warrants outstanding | shares | 10,280 |
Redemption Of Warrants When The Price per Class A Ordinary Share Equals Or Exceeds $18.00 [Member] | |
Warrant redemption condition minimum share price | $ 18 |
Redemption Of Warrants When The Price per Class A Ordinary Share Equals Or Exceeds $18.00 [Member] | Public Warrants [Member] | |
Warrant redemption condition minimum share price | 18 |
Redemption price per public warrant (in dollars per share) | $ 0.01 |
Redemption period | 30 days |
Threshold trading days for redemption of public warrants | 20 days |
Threshold consecutive trading days for redemption of public warrants | 30 days |
Threshold number of business days before sending notice of redemption to warrant holders | third trading day |
Redemption Of Warrants When The Price Per Class A Ordinary Share Equals Or Exceeds $10.00 [Member] | |
Redemption price per public warrant (in dollars per share) | $ 0.10 |
Warrant redemption condition minimum share price scenario two | $ 10 |
Redemption Of Warrants When The Price Per Class A Ordinary Share Equals Or Exceeds $10.00 [Member] | Warrant [Member] | |
Redemption period | 30 days |
Stock Option Plan and Stock-B_3
Stock Option Plan and Stock-Based Compensation (Details) | 4 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Stock Option Plan And Stock-based Compensation | |
Number of options outstanding, beginning | shares | |
Weighted-average exercise price, beginning | |
Number of options, Granted | shares | 1,377,172 |
Weighted-average exercise price, Granted | $ 1.53 |
Number of options, Forfeited | shares | (392,272) |
Weighted-average exercise price, Forfeited | $ 1.53 |
Number of options outstanding, ending | shares | 984,900 |
Weighted-average exercise price, ending | $ 1.53 |
Weighted average remaining contractual term (years) | 5 years 5 months 19 days |
Weighted-Average Fair Value at Grant Date | $ 0.61 |
Number of options exercisable | shares | |
Weighted-average exercise price, options exercisable |
Stock Option Plan and Stock-B_4
Stock Option Plan and Stock-Based Compensation (Details 1) - Successor [Member] | 4 Months Ended |
Jun. 30, 2023 | |
Expected volatility of underlying stock | 37.35% |
Dividends assumption | |
Minimum [Member] | |
Risk-free interest rate | 3.62% |
Expected life of option grants | 5 years |
Maximum [Member] | |
Risk-free interest rate | 3.67% |
Expected life of option grants | 7 years |
Stock Option Plan and Stock-B_5
Stock Option Plan and Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | |||
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Mar. 10, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock option granted | 1,377,172 | ||||||
Fair value of common stock as of grant date | $ 0.61 | ||||||
Successor [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock-based compensation | $ 98 | ||||||
Successor [Member] | Employee Stock Options [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock-based compensation | $ 55 | 57 | |||||
Unrecognized stock compensation expense | 412 | $ 412 | $ 412 | ||||
Weighted average remaining term | 1 year 9 months | ||||||
Successor [Member] | Employee Stock Options [Member] | Employees And Directors [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock option granted | 1,377,000 | ||||||
Vesting period | 2 years | ||||||
Weighted average fair value | $ 0.63 | ||||||
Fair value of common stock as of grant date | $ 1.53 | ||||||
Successor [Member] | Employee Stock Options [Member] | Employees And Directors [Member] | Minimum [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Option life | 5 years | ||||||
Successor [Member] | Employee Stock Options [Member] | Employees And Directors [Member] | Maximum [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Option life | 10 years | ||||||
Successor [Member] | Restricted Stock Units (RSUs) [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock-based compensation | 41 | $ 41 | |||||
Unrecognized stock compensation expense | $ 1,116 | $ 1,116 | $ 1,116 | ||||
Restricted stock units stock granted | 160,000 | ||||||
Weighted average fair value restricted stock unit | $ 11.12 | $ 11.12 | $ 11.12 | ||||
Predecessor [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock-based compensation | $ 158 | $ 1,002 | |||||
Predecessor [Member] | Employee Stock Options [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Stock-based compensation | $ 158 | $ 355 | $ 1,002 | ||||
2023 Equity Incentive Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Shares available for issuance | 2,110,500 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details Narrative) - Successor [Member] $ in Thousands | 4 Months Ended |
Jun. 30, 2023 USD ($) | |
Public Placement Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of warrants | $ 7,452 |
Private Placement Warrants [Member] | Fair Value, Inputs, Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of warrants | $ 5,551 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | |
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Successor [Member] | |||||
Income tax benefit/(provision) | $ 981 | $ 2,541 | |||
Effective tax rate | (6.24%) | (17.51%) | |||
Deferred tax liability | $ 4,354 | $ 4,354 | |||
Predecessor [Member] | |||||
Income tax benefit/(provision) | $ 0 | $ 38 | $ 62 | ||
Deferred tax liability | $ 4,354 |
Foreign Operations (Details)
Foreign Operations (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Successor [Member] | ||||||
Revenues by geographic area | $ 1,915 | $ 2,257 | ||||
Operating income (loss) by geographic area | (3,683) | (4,170) | ||||
Net income (loss) by geographic area | (14,730) | (11,972) | ||||
Identifiable assets by geographic area | 72,289 | 72,289 | ||||
Long lived assets by geographic area | 20,871 | 20,871 | ||||
Goodwill by geographic area | 44,200 | 44,200 | ||||
Successor [Member] | UNITED STATES | ||||||
Revenues by geographic area | 1,550 | 1,822 | ||||
Operating income (loss) by geographic area | (2,926) | (3,412) | ||||
Net income (loss) by geographic area | (13,980) | (11,200) | ||||
Identifiable assets by geographic area | 71,911 | 71,911 | ||||
Long lived assets by geographic area | 20,290 | 20,290 | ||||
Goodwill by geographic area | 44,200 | 44,200 | ||||
Successor [Member] | CANADA | ||||||
Revenues by geographic area | 365 | 435 | ||||
Operating income (loss) by geographic area | (766) | (924) | ||||
Net income (loss) by geographic area | (761) | (919) | ||||
Identifiable assets by geographic area | 41 | 41 | ||||
Long lived assets by geographic area | 386 | 386 | ||||
Goodwill by geographic area | ||||||
Successor [Member] | INDIA | ||||||
Revenues by geographic area | ||||||
Operating income (loss) by geographic area | ||||||
Net income (loss) by geographic area | ||||||
Identifiable assets by geographic area | ||||||
Long lived assets by geographic area | ||||||
Goodwill by geographic area | ||||||
Successor [Member] | PHILIPPINES | ||||||
Revenues by geographic area | 219 | 415 | ||||
Operating income (loss) by geographic area | 9 | 166 | ||||
Net income (loss) by geographic area | 11 | 168 | ||||
Identifiable assets by geographic area | 410 | 410 | ||||
Long lived assets by geographic area | 195 | 195 | ||||
Goodwill by geographic area | ||||||
Successor [Member] | Eliminations [Member] | ||||||
Revenues by geographic area | (219) | (415) | ||||
Operating income (loss) by geographic area | ||||||
Net income (loss) by geographic area | 21 | |||||
Identifiable assets by geographic area | (73) | (73) | ||||
Long lived assets by geographic area | ||||||
Goodwill by geographic area | ||||||
Predecessor [Member] | ||||||
Revenues by geographic area | 1,620 | $ 2,149 | $ 4,731 | |||
Operating income (loss) by geographic area | (4,381) | (10,846) | (12,418) | |||
Net income (loss) by geographic area | (4,380) | (11,034) | (12,705) | |||
Identifiable assets by geographic area | $ 29,280 | |||||
Long lived assets by geographic area | 20,659 | |||||
Goodwill by geographic area | ||||||
Predecessor [Member] | UNITED STATES | ||||||
Revenues by geographic area | 1,395 | 1,718 | 3,885 | |||
Operating income (loss) by geographic area | (3,479) | (8,710) | (9,360) | |||
Net income (loss) by geographic area | (3,342) | (8,563) | (9,082) | |||
Identifiable assets by geographic area | 24,591 | |||||
Long lived assets by geographic area | 15,558 | |||||
Goodwill by geographic area | ||||||
Predecessor [Member] | CANADA | ||||||
Revenues by geographic area | 285 | 616 | 1,217 | |||
Operating income (loss) by geographic area | (905) | (2,067) | (3,075) | |||
Net income (loss) by geographic area | (1,041) | (2,460) | (3,599) | |||
Identifiable assets by geographic area | 5,484 | |||||
Long lived assets by geographic area | 4,788 | |||||
Goodwill by geographic area | ||||||
Predecessor [Member] | INDIA | ||||||
Revenues by geographic area | 144 | 414 | ||||
Operating income (loss) by geographic area | (29) | 43 | ||||
Net income (loss) by geographic area | 31 | 4 | ||||
Identifiable assets by geographic area | 228 | |||||
Long lived assets by geographic area | 98 | |||||
Goodwill by geographic area | ||||||
Predecessor [Member] | PHILIPPINES | ||||||
Revenues by geographic area | 160 | |||||
Operating income (loss) by geographic area | 3 | (26) | (26) | |||
Net income (loss) by geographic area | 3 | (28) | (28) | |||
Identifiable assets by geographic area | 415 | |||||
Long lived assets by geographic area | 215 | |||||
Goodwill by geographic area | ||||||
Predecessor [Member] | Eliminations [Member] | ||||||
Revenues by geographic area | (220) | (329) | (785) | |||
Operating income (loss) by geographic area | (14) | |||||
Net income (loss) by geographic area | $ (14) | |||||
Identifiable assets by geographic area | (1,438) | |||||
Long lived assets by geographic area | ||||||
Goodwill by geographic area |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||
Mar. 14, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Successor [Member] | ||||||
Operating lease expenses | $ 56 | $ 65 | ||||
Weighted average remaining lease term | 2 years 8 months 12 days | 2 years 8 months 12 days | ||||
Weighted average discount rate used to determine operating lease | 8% | 8% | ||||
Predecessor [Member] | ||||||
Operating lease expenses | $ 57 | $ 203 | $ 300 | |||
Weighted average remaining lease term | 2 years 9 months 18 days | |||||
Weighted average discount rate used to determine operating lease | 8% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | |
Jul. 14, 2023 | Aug. 14, 2023 | |
Successor [Member] | ||
Subsequent Event [Line Items] | ||
Number of public warrants exercised | 435 | |
Strike price | $ 11.50 | |
Proceeds from public warrants exercised | $ 5,003 | |
Warrant Holder [Member] | ||
Subsequent Event [Line Items] | ||
Number of warrant purchase | 2,000 | |
Common stock par value | $ 0.0001 | |
Number of Warrant exchange | 600 |